1. CENTRE- STATE FINANCIAL RELATIONS IN THE CONTEXT OF GST
M. JAI GANESH- RESEARCH SCHOLAR, VITSOL, VIT UNIVERSITY- CHENNAI

2. Introduction The GST is the largest-ever tax reform.
It focuses on cooperation instead of self-interests. 
Centre and Union government have agreed to give up the right to tax for the purpose of common good.
To make one nation, one tax possible, Centre and State are pooling in the Sovereignty.

3. GST And Centre State Relation
Taxing powers are divided by Constitution, with no overlapping.
The Centre has exclusive power to levy tax on the manufacture of goods, while the states has power to levy tax on sale of goods or purchase of goods
In the case of interstate sale of goods, the Centre has power to levy the tax.
The states are not empowered to collect the tax on sale of goods in the course of export or import from india.

4. Taxation before GST
Before introduction of VAT, tax were levied on both input used and output made.
This cause tax on tax or mutiple taxation.
With VAT, this problem of tax cascading was removed, but VAT cannot subsume all tax.
Under VAT regime all the goods and services were taxed on differently.
Constitutionally services were taxed only by the central government.

5. Taxes to replaced by GST

6. Constitutional amendment Act(CAA)
The GST requires Constitutional amendment to create a concurrent taxing power.
CAB passed by the Rajya Sabha on and Lok Sabha , after ratification from states, it was notified by the Central Government as Constitution(101st amendment ) Act, 2016.
GST Council consitiuted w.e.f on

7. Features of CAA Concurrent juridiction ( Article-246A).
Clause 19- the compensation for the states for 5 years.
GST defined as any tax on the supply of goods or services or both, except alcohol for human comsumption-Article-366(12A).

8. Contt..
Goods means all material, commodities and Articles- Article 366(12).
Services means anything other than goods- Article 366 (26A).
The inclusion of Petroleum products with GST will be based on the recommendation of GST council.
Parliament has the power to determine the principle of levying the GST in case of interstate trade.

9. GST Model in India
Dual system of GST model, to protect the autonomy of states.
CGST- levied by Central.
SGST- levied by State.
IGST- levied by Central, in case interstate trade.
Implementation through multiple statutes, but the basic features like taxable matters, non - matters, rates will be same.

10. GST Council Consitutional body under Article 279A.
Most powerful body in regime of indirect tax because it is the highest decision making body.
Composition
Union FM & MOS (Rev)-Chairperson.
Minister in charge of finance or taxation of each state, Vice chairperson- to chosen among them.

11. Contt.. Quram is 50% of total members.
Decision by 75% majority, by the members presenting and voting.
weightage of votes: Centre-1/3rd of votes, States 2/3rd of votes.
Powers to make recommendations on taxes and others to be subsumed by GST, Exemption and threshold limit, tax rates and Model GST laws and procedure.

12. Cooperative Federalism
Council will know over see tax collection of about Rs 13 trillion* in the form of indirect tax.
Equal partners in the management of macro- economincs.
States has to think nationally in negotation over the rates, to keep the inflation in control.
Voting power of the States - enshines a form Cooperative federalim.

13. Dispute Resolution
The first GST bill was tabled by then Finance Minister Mr. Pranab Mukherjee, has a provision of independent dispute settlement authority.
Parliament standing committee rejects the idea as it is overriding the powers of the parliament.
The bill, proposed by Mr.Arun Jaitely have a provision, that the GST council is to create a mechanism for redressal.

14. Conclusion GST, unifies market and creates one tax one nation
Removes the regional disparties in india.
GST, unifies market and creates one tax one nation
Boost the “Make in India”, “Digital India” , “Start-Up” Programmes.
Governance of indirect tax is made simplified and promote the intergovernmental coodination with the I.T enabled process.
Better tax compliance due to robust I.T infrastructure